8 October 2021

Key insights

Europe – European counties are relaxing travel restrictions following rapid progress with the vaccination roll-out. The EU digital green certificate facilitating inter European travel is now in force. It aims to facilitate travel within the EU. 

Sweden – Swedish media reports that container shipment fees from China to northern Europe have increased tenfold in 2021. There are major delays in shipping traffic and bottlenecks at container terminals.  

UK – Australia and UK reached an ‘in-principle’ agreement to liberalise trade on 17 June. This includes a commitment to substantially raise quotas for beef and sheep-meat imports into UK and eliminate tariffs over a 10-15 year period. Tariffs and quotas on Australian sugar will be relaxed over an 8-year period. Tariffs on dairy will be relaxed over a 5-year period. It also includes a commitment to mutual recognition of professional qualifications. The new trade agreement will create multiple opportunities for Australian exporters.

Market opportunities

Health

EU / UK – Changes to UK and EU regulatory requirements for medical devices will likely impact Australian exporters. Austrade is working with exporters to explore issues, including for companies that currently operate across UK–EU markets. Exporters will experience three sets of major changes over the coming 2 years:

  • Transition to new, EU medical device regulation (MDR) requirements in May 2021
  • Transition to new, in-vitro diagnostic regulations (IVDR) requirements in May 2022
  • Transition to new UK Conformity Assessed (UKCA) marking requirements that will affect medical devices from July 2023. 

Affected exporters should contact Austrade (see below). An overview of the changes affecting the regulation of medical devices in the UK and the EU is available. 

UK – The UK Health Minister has signalled that some NHS changes introduced to cope with the pandemic will likely become permanent – including remote consultations. This creates potential opportunities for Australian telemedicine and remote diagnostics companies. 

UK – Introductions between Australian probiotic/healthy food companies and UK distributors indicates strong interest for Australian products in this sector.   

Defence and aerospace

UK – Austrade is collaborating with the Australian Defence Export Organisation to organise a market briefing event for Australian industry on the UK MOD’s next generation ‘Future Air Tempest’ program, the UK’s Future Combat Air System. This is a £1.9 billion project to develop the next generation combat aircraft, replacing the Typhoon.    

UK – UK Prime Minister Johnson has announced the biggest program of investment in British defence since the end of the Cold War. This involves an overall cash increase of £16.5 billion over four years. The commitment will enable the Government to invest in cutting-edge technology, positioning the UK as a global leader in domains such as cyber and space. 

UK – There are growing opportunities for Australian cybersecurity and technology companies to work with the UK Government, and defence and security agencies. The National Cyber Security Centre (NCSC) – part of Government Communications Headquarters (GCHQ) – has reported a surge in cyberattacks and incidents this year. Protecting the NHS and health-related research is currently a major priority for the NCSC. 

Manufacturing 

Europe – The European Commission is accelerating plans to achieve ‘strategic autonomy’ in the electric vehicle (EV) battery sector. The EU announced a further €2.9 billion funding to support research and innovation in all segments of the battery value chain following €3.2 billion announced in December 2019. The EU expects to produce batteries for at least six million electric cars by 2025.   

Czech Republic – The Czech Republic looks set to become a centre for laser physics and this will create opportunities for Australian industry. ELI Beamlines (a global leader in laser infrastructure) has been officially confirmed as a member of ELI ERIC (Extreme Light Infrastructure – European Research Infrastructure Consortium). The ELI project will be funded from Horizon 2020 (€20 million). 

Germany – Digital design companies operating in Europe report that many SMEs are prioritising updates to their online presence. Business is therefore strong, with growing demand for freelance web designers. This may provide opportunities for Australia-based web designers. 

Netherlands – The Dutch government is set to invest hundreds of millions of euros in the technology and chip sectors. The EU has created a generous exception to the strict state aid rules for a capital injection in the Dutch chip industry. The government wants to earmark €300 million this year to develop new technologies and services in two sectors: the national chip industry and to set up European cloud infrastructure. 

Sweden – Swedish steel maker SSAB has opened a demonstration ‘green steel’ facility that uses hydrogen instead of metallurgical coal. SSAB aims to produce fossil-fuel free steel commercially by 2026, initially for the European automotive industry. SSAB currently imports A$300 million of thermal coal per year. 

UK – Austrade is monitoring the impact of the new Brexit rules that will progressively restrict the ratio of non-UK or non-EU components that can be used in EV battery and vehicle manufacture over the next 6 years. This may encourage use of Australian precursors, by forcing EV-making companies to cease buying EV batteries from suppliers in Asia.

UK – The Government published a new ‘Integrated Review of Security, Defence, Development and Foreign Policy’ on March 16. It foreshadows increased spending on space projects, cyber security and naval shipbuilding. The review also identified reliance on rare earth minerals as a security concern. It describes a ‘tilt’ in UK foreign policy towards the Asia-Pacific region. 

Logistics

Netherlands – The Holland International Distribution Council has advised that there is a warehouse boom in the Netherlands as companies restructured their EU supply chain, following UK’s exit from the EU Customs Union. This is also impacting Australian companies with current logistic partners in the UK, and Austrade is providing assistance. 

Resources & energy

Spain –  The Government is pushing forward the energy transition and industrial sector agenda with the support of the EU´s recovery funding. The government will allocate €4.6 billion to finance strategic industry projects over the next three years including:

  • €850 million for waste and circular economy
  • €1.6 billion for the green hydrogen plan that has industrial applications
  • €160 million for the aerospace sector
  • €40 million for R&D in sustainable automotive
  • €480 million that will partly go to sectoral digitisation projects

Half of this will be non-refundable European funds. 

UK – The UK’s National Infrastructure Strategy includes pro-electric vehicle (EV) policies, and funding for hydrogen and carbon-capture and storage (CCS). Major highlights for Australian industry include £1 billion committed to bring forward four CCS clusters by 2030 and another £800 million for the creation of the CCS Infrastructure Fund. A £240 million Net Zero Hydrogen Fund is also being set up.

Food and agriculture

Germany – Reports suggested that demand for macadamias within Europe and worldwide is growing. This presents a significant opportunity for Australian macadamia exporters to grow their market share over the next five year. At present Australia’s macadamia exporters have an approximate 15% market share in Europe. European buyers of macadamias are very price sensitive and competition from South Africa and Kenya is intense. Austrade is working with the Australian Macadamia Society at Anuga to raise the profile of Australian macadamias among European food producers. 

Czech Republic – Australia’s ability to export premium meat into the Czech Republic has been stymied by a reduction in the shared quota for grain-feed beef. The shared quota for Australia, Uruguay, Argentina and New Zealand on a first-come, first-served basis has shrunk to 10,000 tonnes, which indicates little room for increased imports into the EU.

Italy – The Italian HORECA sector – which refers to food service and hotel businesses – has been hard hit by the pandemic. 22,000 restaurants closed and over 500,000 jobs have been lost in the last 14 months. Six out of 10 restaurant owners recorded a decrease in turnover of more than 50% with little to no support from government. This will be an important consideration for agrifood exporters targeting this market segment.   

UK – A group of UK manufacturers and retailers have signed up for a new project, Foundation Earth. This will see front-of-pack labels put on products to give an indication of environmental impact. The system behind the labels looks at farming, processing, packaging and transport. It assesses the environmental impact of a product based upon carbon (49% weighted), water usage (17%), water pollution (17%) and biodiversity loss (17%). Some of the retailers that are joining this initiative are M&S, Sainsbury’s and the Coop. This initiative could have some impact on Australian exporters if implemented across the whole retail industry. It follows recent concern expressed by UK retailers on the carbon footprint of products coming from Australia

UK – Austrade London is now a member of the UK Food and Drink Federation (FDF), the UK’s peak body for food and beverages manufacturers. Membership will increase the visibility of existing Australian imports, and help identify opportunities for collaboration. 

UK – Major UK food retailers are boosting annual spending on UK-made food and drink products. A survey showed 74% wanted to see food businesses and retailers in the UK express more support for local British producers amid the pandemic and Brexit.  

UK – Trial imports of premium stone fruit have met with a positive reception, although the lockdown hampers marketability in hospitality venues. Economic conditions are likely to remain challenging. Austrade in London is receiving enquiries from potential cherry importers. This could indicate a certain openness to trade as the COVID-19 restrictions are relaxed. 

UK – Awareness of UK retailers about the environmental impact of their supply chain has been mentioned as a possible impact to Australian F&B companies wanting to work in this market.

Contact: Jennifer Mackinlay